Bundled Payments, Prosthesis Cost and Private Practice: Listen Up to Protect Yourself! Michael P . Ast, MD Director, Outpatient Joint Replacement Program Mercer County Surgery Center Director, Robotic Joint Replacement Program RWJ-Barnabas University Hospital- Hamilton
Disclosures • I have no relevant disclosures for this talk
Bundled Payments • We are all a little sick of hearing about them • Future is unknown – Likely hear to stay in some fashion • Mean very different things to academic and private surgeons
Implant room
Implant stock
Equipment storage
My hospital implant room
My hospital equipment stock
Bundles in the Literature • Literature often talks about complex programs to be developed – Navigators – NPs in ED to prevent readmissions – Additional FTEs on floor to accelerate discharge – Hiring evening physical therapists to increase POD#0 evals
Bundles in the “Real World” • Hard to get small hospitals on board with any expenditure – Even with proven long term savings • Hard to get multiple competing surgeons on the same page • Need simple quick solutions
Where are the Savings? • JAMA Intern Med 2017 • Navathe et al – Savings in a bundle • Implant Prices • Post-Acute Care Setting • Focusing on these are the simplest start
Implant Pricing • Several studies have shown dramatic variation in costs of TJR in the US • Implant costs are a large driver of variation • Some hospitals spend 2x as much on implants as others Haas et al. J Arthroplasty 2017 Haas et al. Arthroplasty Today 2017 Bosco et al. J Arthroplasty 2014
How to address this?
Implant Pricing • The simplest way to quickly reduce costs in a bundle – Can reduce costs by up to 29% of total costs • Several proposed methods JAMA Intern Med 2017
Basic Negotiating • “Flea Market Bargaining” • Usually done on hospital side only • No input from surgeons • Usually unsuccessful
Single Vendor • A favorite of implant companies and hospital administrators • Contract based on guaranteeing a certain percentage of volume (80-90% ) • Costs generally about 20% higher than maintaining competition Haas et al. J Arthroplasty 2017
Physician Committee Shelf Pricing • Collaboration between surgeons and hospitals to decrease implant pricing • Takes trust and work on both sides • Hospitals must make real effort to negotiate and treat everyone honestly • Surgeons must stick to their side of the bargain
Shelf Pricing • A fair price is determined • All implants that meet this price can be used without question • Any implant that cannot meet this price will no longer be used • Surgeons must be willing to walk away from their implant for a few cases – Companies will always come back to the table
Shelf Pricing • Often does not include revisions • May consider demand matching for certain “premium” implants – Surgeons set criteria for certain implants • Can be based on age, activity level, etc • Must always be room for special circumstances
Savings • These should be shared as much as possible • If direct payment to surgeons can’t be made – Ensure money goes to Joint Center – Hire Nurse Navigator – Improvements on the floor or PT gym – Should NOT offset other hospital budget shortfalls
Thank you!
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